Warsh pledges Fed policy ‘regime change’ to rid inflation ‘tax’ on American

Calling inflation an “unfair burden,” Federal Reserve Chairman Kevin Warsh on Tuesday reiterated his call for “regime change” at the central bank.

“It has been a tax on the American people and businesses. We plan on getting rid of that tax,” he said. “That means we need a regime change in policy, and we need new consideration of practices, some of which have been working, some of which haven’t.”

In remarks for delivery to separate congressional panels this week, Warsh ramped up his recent tough talk on inflation, while also touting the strength of the U.S. economy and benefits coming from business investment, particularly involving artificial intelligence.

He highlighted the five task forces he has created to look at all aspects of how the Fed conducts business. The panels will examine the communications, technology, the balance sheet, economic data the Fed employs and the way it looks at inflation.

Taken together, Warsh said they will further his goals to remake the central bank.

“In six weeks, we have caused, I think, a sea change in new thinking-the beginning of a set of reforms that are going to be put in place across at least five dimensions in monetary policy,” he said. “We made a lot of progress in six weeks, but I think it’s important to use this opportunity wisely.”

The remarks come just two months into Warsh’s term. Fed chairs are mandated to appear twice a year before Congress to deliver a monetary policy report then take legislators’ questions.

“Today we are at a hinge point in history. It’s up to all of us to meet this moment,” said Warsh, who spoke Tuesday to the House Financial Services Committee then heads to the Senate Banking Committee on Wednesday.

“The Fed’s number one objective is to get monetary policy right — or as near to it as we possibly can. That is our clear and constant aim, the star we steer by,” he added. “And if we get policy right — and we will — the inflation surge of the last five years will be a thing of the past.”

Warsh takes over a Fed that has seen inflation exceed its 2% mandate since 2021. During his confirmation hearing earlier this year, the chairman called inflation “a choice,” and emphasized repeatedly the importance of bringing down the cost of living during his first news conference. He first made the pledge about “regime change” during an interview last summer with CNBC.

Warsh further criticized past practices of the Fed, specifically a policy adopted in 2020 that allowed for above-target inflation after periods of lower prices. The policy, known as flexible average inflation targeting, specifically sought to address imbalances in employment, the type of thing that Warsh has argued is outside the Fed’s scope.

“That central bank wasn’t the first central bank to ask for a little more inflation and end up with a lot…